Internet retailers get dealt taxing blow

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WASHINGTON — Amazon and other online-only retailers have been dealt a major blow, as legislation introduced last week seeks to require such retailers to collect sales tax.

The Main Street Fairness Act would allow states that have adopted the Streamlined Sales and Use Tax Agreement to require out-of-state sellers to collect sales tax whether they have a physical presence in their state or not. The bill would cover all “remote sellers,” which include online retailers, catalog merchants and “1-800” offers on radio and television.

The new bill is in response to a nearly 20-year-old Supreme Court ruling that required retailers to collect sales tax from out-of-state customers only if they have a physical presence such as a store, warehouse or office in the customer’s state. The court held that the 45 state and 7,600 local sales tax systems across the nation were too complicated for a retailer to otherwise know how much tax to collect.

The National Retail Federation said it welcomed welcomed legislation that would help preserve Main Street jobs by requiring Internet retailers to collect sales tax the same as local bricks-and-mortar stores.

“We believe there should be a level playing field where all retailers follow the same rules regardless of whether they sell their merchandise in a bricks-and-mortar store, through the mail or online,” NRF SVP for government relations David French said. “This bill would end a situation where Internet sellers have held an unfair price advantage over local stores for far too long. Tax policy should be channel neutral and not favor one segment of an industry over another.”